President Donald Trump directed the U.S. Trade Representative Robert Lighthizer to determine whether to open an investigation into China’s intellectual property (IP) practices, including forced IP transfers and theft. The investigation in turn could lead to trade penalties. Admiral Dennis Blair, Co-chair of the Commission on the Theft of American Intellectual Property (IP Commission), attended the ceremony at the White House. The IP Commission is an independent and bipartisan initiative of the National Bureau of Asian Research (NBR).

The IP Commission has called for a robust approach to address the full range of IP
issues since the publication of the IP Commission Report in 2013. In its 2017 update
to that report, the IP Commission calculated that the cost to the U.S. economy from
the theft of American IP exceeds $225 billion a year in counterfeit and pirated
tangible goods, pirated software, and theft of trade secrets, and could be as high
as $600 billion–with China as the world’s principal infringer of IP. The IP
Commission has drawn the attention of the Trump administration

“America has simultaneous and overlapping critical interests, including the vitality
of our economy and a stable balance of power,” says Dr. Richard Ellings, Director of
the IP Commission and President of NBR. “The scale of Chinese forced transfer and
theft of American intellectual property threatens these interests, both our
prosperity and security, and thus U.S. policy must address this set of issues.”

The United States retains a variety of countermeasures to drive down IP theft. It
could raise import duties on select Chinese products under Section 301 of the Trade
Act of 1974 if an investigation finds that China has engaged in unfair trade
practices. Sanctions are another option: Section 1637 of the 2015 National Defense
Authorization Act authorizes the president to sanction individuals and any entities
responsible for IP theft. To date, this tool has not been applied to IP cases.

The 2017 Update to the IP Commission Report provides additional recommendations
aimed to curb IP theft and safeguard the competitive advantages of U.S. firms,
including the following:

consider U.S. companies’ policy of protecting IP as a criterion for approving major
foreign investments in the United States under the process of the Committee on
Foreign Investment in the United States

block foreign companies that repeatedly use or benefit from the theft of American IP
from accessing the U.S. banking system

establish in the private, nonprofit sector a rating system on levels of IP legal
protection by nations, including China

support U.S. companies and technology that can both identify and recover IP stolen
through cyber means

The following experts on the IP Commission are available for interviews:

Dr. Richard Ellings, Director, IP Commission; President, The National Bureau of
Asian Research (Seattle)

Roy Kamphausen, Deputy Director, IP Commission; Senior Vice President for Research,
The National Bureau of Asian Research (Washington, D.C.)

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